Insourcing Debate Is About Strategy, Not Numbers

As the federal government continues to find ways to move contracted work back in-house, it must overcome some major obstacles. One area that has been significantly neglected is effective human capital planning. As a result, the government’s lack of in-house resources has increased its reliance on contractors to help it perform vital functions. This issue became acute with the federal acquisition workforce, but only recently garnered substantial attention. Although human capital plans are being implemented as part of the Office of Management and Budget’s (OMB) guidance on contract savings initiatives, the real challenge remains understanding the roles and responsibilities of current contract activities and how a blended workforce will be managed in order to continue performing the acquisition mission.

Strategic human capital plans can only be effective and executed properly by identifying an organization’s skills and capabilities, and recognizing how that current skill set performs the mission. Contractor visibility and transparency remain areas of concern for the government because of poor information management, lack of oversight and accountability, and most importantly, poor leadership. A renewed focus by the government on contract management is critical to alleviating these continuing problems. In short, the government must have a better grasp of who the agency contractors are and what activities they are performing.

On the other side, industry must also engage by providing information crucial to human capital planning so they too can be more effective. Contractors have more accurate and current data on their workers because of their necessity to maximize profitability and utilization. Obtaining this data from industry will help the government make informed decisions and strike a much needed balance. Only through this partnership and trust can workforce plans be created that are of any value.

Furthermore, vast information to help make these decisions already exists, but because of the lack of contract oversight and administration, in addition to poor overall program management skills by government, this data is either incorrect or incomplete. This creates a vicious cycle because inadequate staffing contributes to contract management issues, which in turn fuels reliance on contractors. Additionally, lack of staffing and bad practices have led to poor quality assurance principles, making it difficult to determine whether contractors are meeting their contract requirements. The end result is that skills, capabilities, and outcomes are obfuscated because of shortcomings in following guidelines for contract execution.

These quandaries must be solved to help shape the balanced workforce and human capital management plans, as contractors will continue to perform vital functions such as the acquisition mission. The government simply does not have the manpower to perform all necessary tasks, and thus contractors help fill a critical gap. However, it is this gap that needs to be the central focus of any debate on insourcing and managing a blended workforce.

A comprehensive review must also be conducted of current contracted services, what services and skills are being purchased, the size and complexity of the contracts, and the efficiency and costs associated with these contracts. This will be an exercise in information management, and the power of collaboration tools, or Gov 2.0, can undoubtedly play an important and essential role.

Solving these problems requires strong leadership, and a demand for accountability and transparency, from both the government and the private sector. Only by working together can both succeed, and provide the tools necessary to create the foundation for effective government management.

Execution is the Key to Improving the Federal Acquisition Process

As 2009 is now in the books, the year ended with plans submitted to the Office of Management and Budget (OMB) by the 24 federal agencies that account for 98% of contract actions. As reported by NextGov, these agencies have identified $19 billion in acquisition-related savings, also announced by OMB in their report on the plans.

These plans will not be made public until spring 2010, when an online dashboard focusing on the savings is launched, in addition to “a combination of strategies,” according to Jeff Zients, federal chief performance officer and OMB's deputy director for management. These plans will apparently focus on program terminations and reductions, spending caps, and more competition with procurement actions.

I for one look forward to the plans, because the lack of information and the “identified savings” seem to be cherry-picked actions with no real long-term impact, focus on real process improvements and business case analyses, contract restructuring, or ways to improve human capital strategic planning. One good area of the plans are a renewed commitment to strategic sourcing and leveraging the buying power of the government. However, details are non-existent, in addition to a strategy that relies on increased use of agency-wide and government-wide contract vehicles, which also need a further look as abundant waste is indicative in the use of these contract vehicles as standardization is needed. However, the inherent culture of “uniqueness” across government will deter this needed analysis on these contract vehicles, and create further waste with any strategic-sourcing initiatives since buying power will not be leveraged to the maximum extent possible.

Encouraging examples were given in the report, such as the Department of Homeland Security (DHS) standardizing desktop operating systems across the department, allowing DHS to award a single contract for all necessary IT products and projecting cost savings of $87.5 million. Also included are examples of savings through in-house engineering expertise for a manufacturing or design flaw, and a new online reverse auction service implemented by Energy. Although these are steps in the right direction, I hope the plans move forward in a more strategic way, or these initiatives will be the equivalent of placing band-aids on wounds that require a tourniquet.

The report continues by discussing how agencies are also seeking to find the right balance of contractors and federal employees. The reporting agencies have apparently developed pilot programs to determine the appropriate number of contractors and federal workers and will report on progress under these programs by May 2010.  According to OMB, these pilots will be assessed to find ways to  “insource” or add resources for contract management. A better use of resources would to create strategic human capital plans now that include a balanced workforce based on skills and capability needs. I would like to think that adding resources for contract management would be a known fact, so it makes better sense to forgo pilots and execute. The time for further pilots and studies has passed, we need action now. Although each reporting agency is required to submit a human capital plan for acquisition by March 31, 2010, I hope the balanced workforce is part of the plan. We shall see.

Finally, the third area of the report is to address one of the vital administration priorities; a reduction of high-risk and noncompetitively awarded contracts. In discussing these contracts, Zients said:

…"carry the greatest potential risk of overspending taxpayer resources." He said the "explosion" of these contracts -- the use of which increased by 129 percent between 2002 and 2008 -- is a concern. Agencies are working to meet the president's goal of reducing money spent through such contracts by 10 percent, and will report twice a year on their progress…

This is an area of concern, as the administration and OMB want to restrict the tools available to the workforce, and add insult to injury by focusing on symptoms and not the disease. The acquisition workforce is understaffed and undertrained, and do not have skills, capabilities, or tools to perform. One of the resulting factors is an explosion in sole source procurement actions, as contracting personnel forgo competition in an effort to increase contract velocity in a desperate and increasingly futile attempt to keep up with the workload. Creating an environment where only fixed-priced contracts should be used, regardless of the requirement or appropriateness of another contract type, has already been attempted and will only lead to more waste, fraud, and abuse. The reality is that more needs to be done with less, and increased communications and collaboration through Gov 2.0 tools is a promising endeavor that should bear fruit (See Better Buy Project). These tools will not solve everything certainly, but will go a long way to improving the acquisition process, and help standardize and improve methods to increase competition, lower costs, and change outcomes for the better.   

This year-end report from OMB continued a disturbing trend on their part in 2009 through a lack of specificity, guidance, and leadership instead of creating an environment of risk-taking, accountability, and a renewed focus on oversight. I hope that 2010 is a year for execution, but apparently we’ll have to wait until March 2010 before we get a roadmap on how we can move the process forward.

Moving The Better Buy Project Forward: An Exercise in Change

Originally posted on the Better Buy Blog

After attending the recent Better Buy Project panel this past week, I blogged about my observations and some issues that came up from that conversation.

That lively discussion continued on the GovLoop Acquisition 2.0 community. Although many commentators took different takes, I think we all agreed that one of the central tenets of successfully implementing Gov 2.0 can focus on one principal area: change management.

Like the Better Buy Project and all Gov 2.0 projects, these initiatives are typically undertaken to changing the overall business environment, and the federal procurement process for Acquisition 2.0. Whether trying to improve the requirements definition process, change roles, or define new ways of doing business, and effective Change Management Process is paramount to stress the benefits, demonstrate long-term value, and minimize the resulting impact on current projects.

Implement a Change Management Process in Gov 2.0

Unlike most projects with a typical project manager, I do believe in the need for the extra project leadership via change agents; committed leaders who are willing to take the risks associated with these initiatives and drive them to fruition. Due to the nature of the current environment in Government procurement (e.g. risk-aversion and status-quo mentality), change is a difficult pill to swallow. This mindset is further exacerbated by the perception of disrupting productivity, as the acquisition workforce has been forced to do more with less. Many past improvement initiatives have also not been driven by change agents, and thus go nowhere. In regards to Gov 2.0, many procurement officials feel they do not have the time to bother with yet another program from leadership that only makes one roll their eyes with the perception of no real value or benefit to helping one do their job better, faster, and cheaper; another passing fad. Thus the need for real commitment from the top and the change agents as demonstrated with Better Buy, as the project is showing real value and a commitment to execute.

Successful implementation will rest with Change Management, which is defined as the process of monitoring and controlling change within a project. By managing the implementation of Gov 2.0 initiatives in regards to acquisition, leaders can:

• Reduce the negative impact on current acquisition projects
• Identify new issues and risks, and implement lessons learned as a result of changes implemented during execution
• Ensure that implemented changes do not affect overall desired objectives and outcomes
• Control cost of implemented changes

Successful Change Process: A Four Step Model

Change Management in itself is a project within a project. It is already being executed at the General Services Administration (GSA), where projects are actively being sought to pilot the inputs from Better Buy users. Nonetheless, implementing and executing on Gov 2.0 initiatives can follow these Change Management steps:

Identify: The first step in the change process is to identify the need for change, which is apparent in federal acquisitions. This is the overall objective of the Better Buy Project, where any member can suggest a change to the process. Some of the discussion at the panel included capturing statistical data of the user community and their input. However, it is the relevancy of the input that is most important. Further, anonymity can be a powerful tool to providing desired input, free from possible managerial reprisals. The Better Buy Project will hopefully serve as a template for capturing input for change, and helping leaders identify needed focus on process improvements and areas to retool business operations. The Securing Americans Value and Efficiency (SAVE) program is another example of real benefit through collaborative processes, although these types of tools should be done with more frequency. Identifying the need to change is driven by value added; describing the change, and identifying drivers, benefits, costs and likely impact of the change on the project, process, or agency.

Review: This is what the Better Buy Project is currently doing in its Phase II, which is to investigate the recommended changes to identify feasibility and impact, both long and short-term. GSA experts are looking for the low-hanging fruit, and those suggestions that can be successful delivered to have the greatest impact with the least disruption. Normally changes which are not critical to project delivery should be avoided whenever possible to prevent "scope creep," but the Web 2.0 construct seemingly turns this project management dictum on its head. Implemented changes will have impact on project delivery, specifically by buying better, faster, cheaper. It is the disruption on current delivery that can not suffer, and why Butter Buy implementation will be so difficult. Finding ways to implement gradual change is preferred, as lessons learned can be studied, reviewed, and implemented with more meaningful impact.  

Approve: Experts have to review the recommended changes and input, as some recommendations are real and others use these forums as an outlet for venting frustration. Nonetheless, it is the naysayers that can also have value on the conversation, as they may point things out that are not always clear to those who are committed and engaged towards success. As discussed at the panel, the suggestions on Better Buy with the greatest number of votes does not necessarily mean ranking, so leaders do need to weigh the value of the input. More importantly, these decisions need to be communicated to the user community, as members should be able to see what input is being considered, and what is not. Ultimately, these decisions should be based on the level of risk, impact, benefits and cost to the overall project or process, and the decision may be to decline, delay or approve the change request. Either way, this level of communication and transparency can go a long way to refining input. More importantly, input will hopefully keep coming as users can see execution is the real end goal, and the initiative is a worthwhile investment of time to participate.

Implement: Here is another way to use collaboration tools with user input. Who knows best on the projects or processes that can be improved than users? Of course members will no doubt vent some more, but that is why input is vetted by experts and leaders to ensure the cream rises to the top. Leadership needs to ensure proper input gets implemented, and also ensure that proper communications strategies are put in place such that changes are scheduled and implemented accordingly. After implementation, leadership, helped with the users, can review the effects of the change on selected  project and processes to ensure that they have achieved the desired outcomes. This in effect creates a change agent community, which helps leadership further communicate outcomes and execute more efficiently. Further, these successful changes then need to be broadly communicated to the overall Gov 2.0 community, to further build bridges and roadmaps for successful implementations across Government.

Throughout a sound Change Management Process, Government leaders can monitor and control changes to selected projects and processes by communicating often, and in turn ensuring that communication is broadcast using the same collaboration tools and keeping track of changes that have been accepted, rejected, or in review. This in effect creates a transparent, up-to-date Change Register.

By completing these steps, Government leaders can carefully monitor and control project and process changes, which in turn increase the likelihood of success. I look forward to further actions by the Better Buy Project, and other initiatives that are leading the way in changing how the Government operates.

Better Buy Project Moves Forward

As collaboration tools, Gov 2.0, and other initiatives to encourage transparency and solicit input from stakeholders move forward, a pilot on this front met today to discuss implementing these ideas and creating further momentum via proof of concept.

The Better Buy Project, as I discussed in a previous post, is a collaborative initiative between the General Services Administration (GSA), the American Council for Technology/Industry Advisory Council (ACT-IAC) and the National Academy for Public Administration (NAPA). The initiative is focused on collecting ideas to help shape the future of acquisition, with the ultimate goals of creating an acquisition process that is world-class through a concept of “crowdsourcing.”

Moderating the panel was Chris Dorobek of Federal News Radio, who was jokingly introduced as the Most Interesting Man in the World (I told him I would include in this post, so here it is!). Although I did not actively ask questions, and Chris did a great job moderating and going around the room soliciting input, my primary objective was to get the sense of the questions being asked and the level of awareness of the project. Further, I wanted to hear from the panelists, most notably Mary Davie of GSA, who has spearheaded the initiative through thoughtful and visionary leadership. Some of the issues addressed were interesting for what was discussed, but more so for issues that were left outstanding.

Of course one of the biggest issues to executing Gov 2.0 initiatives are the regulations and policies that need to be addressed to ensure compliance. The group discussed Section 508 and Federal Information Security Management Act or FISMA, in addition to overall security requirements most notably at Defense and raised by resident expert Noel Dickover. However, what remained mostly silent, and what interests me, is getting acquisition leaders interested and engaged. That seems to be one of the biggest obstacles to Gov 2.0; the metrics, the ROI, the impacts on the profession, and that real value can be difficult to measure or remains intangible. Although I think headway is being made on that front, certainly the need to communicate the real value added is vital for this and similar Gov 2.0 initiatives. For the Better Buy Project, and the overall Acquisition 2.0 movement, the message campaign is about buying faster, cheaper, and more effectively. Further, the tools should allow procurement professionals in both Government and industry to exchange meaningful information to create better requirements, facilitate market research, and help create the foundation for successful outcomes up front.

The Better Buy Project needs to do a better job of communicating to the user community what is being done with the ideas that are being posted and voted on, such that people can see that this initiative is for real. Just because an idea has the most votes does not necessarily mean it will get implemented. In fact, some of the ideas that have the most votes and commentary are  due in part because they are out-of-scope, or require more clarification to understand the user’s intent. Along those lines, these initiatives need to get better input from naysayers, those who think these initiatives are fads and meaningless. Their input is just as vital to those who are engaged and actively participating. Only through a holistic approach to soliciting  input can these pilots create the most value to overcome obstacles and come to fruition.

It is the end-state that ultimately matters, and to that end, GSA is actively taking input from Better Buy and looking for ways to implement them. As Chris Hamm, Operations Director of GSA’s Federal Systems Integration and Management Center (FEDSIM), and also a panelist mentioned, this is the hard part. Who is going to take the risk, and possibly the hit, for sticking their neck out to use these unproven tools in a risk-averse environment? What projects and in what state are needed? These are questions that of course need to be answered, but also prime areas for answers by Better Buy users. The collaboration could help GSA figure this out. Further, leadership and change management are again at the forefront of getting to the next step towards execution.

My end-state for federal procurement is to focus on outcomes and needs, and for Government to get out of the requirements writing business. The world-class federal procurement environment would be performance-based, with the focus on buying real best value through innovation, and to allow acquisition professionals to focus on oversight, surveillance, program management, and performance. I am a strong proponent of streamlining and standardization, as the uniqueness of agency missions, and in some cases, different organizations within an agency, is a canard to continuing status quo. I often consult with federal clients who have very commercial-like operations, yet feel they are unique and have to have everything custom built. Granted I am not proposing a one-size-fits-all approach, but looking for ways to streamline and standardize is not such a bad thing, and can go a long way to creating real savings through the elimination of redundancy and waste. These Gov 2.0 tools, and the initiatives like the Better Buy project, can go a long way to making this end-state a reality.

I hope that Better Buy and similar initiatives continue to find ways to engage the acquisition community, because I believe these tools are a badly needed tool for change. Combined with common sense approaches to process improvements, and working in the current environment without further legislation and laws that create confusion and ambiguity, federal procurement can once again be the starting point for successful government management and get the respect and positive attention it deserves.

Becoming Engaged with NCMA Enhances Professionalism and Mission Success

The NCMA recently published an open letter to Government employees on how to become engaged with the NCMA without conflicts of interest or ethical violations. NCMA provides a collection of neutral networks or communities, at the local and national level, where contract management professionals from all types of government and industry agencies and organizations can come together with a common goal: To enhance their professional expertise in a non adversarial environment, thus enabling them to more effectively accomplish the mission of their organizations.

Acquisition professionals are encouraged to read this letter, as many misconceptions can be addressed about government employees getting involved with the association. Only by working together can we help solve the complex problems faced by the government contracting community, and NCMA is at the forefront of leading this change.

Open Letter to Government Employees

Increasing Competition Means Raising the Bar on Value

As part of the Obama Administration's call for reform of the federal acquisition process, the Office of Management and Budget (OMB) recently issued a second set of memos with guidance on increasing competition for better outcomes. These memos are a continuation of original OMB guidance released in July, which outlined ways to improve acquisition processes, make better use of information related to contractors' past performance, and balance the blended contractor and federal workforce. These initiatives are designed for agencies to achieve a 7 percent cost savings of their baseline contract spending by fiscal 2011, with overall expected savings of $40 billion annually.

In an effort to achieve these goals, OMB guidance states that improved acquisition outcomes through increased competition can be achieved by focusing on requirements and outreach to potential vendors. While this guidance can certainly go a long way to improve acquisition outcomes, OMB has fallen short in providing the specificity agencies need to execute these initiatives. Moreover, OMB also fails to mention one of the fundamental weaknesses in the current state of competition, which is to improve the quality of the vendors competing on federal contracts. OMB falls into the trap of focusing on quantity, which only exacerbates the competition problem by continuing the fixation of focusing on symptoms and not the disease. It does not help the government be a more strategic buyer nor promote innovation.

Many firms that offer innovative solutions are often brushed aside by the archaic decisions by agencies that award contract vehicles acting as gate keepers for who can compete on federal contracts. These processes are designed to treat all firms the same, but therein lies the problem. By restructuring these processes, improvements in competition quality can be realized, as the government can review the experience of firms and what they bring to the government in their totality. If higher quality businesses could qualify for such contracting vehicles and opportunities to compete, value could increase and costs could decrease.

The guidance also fails to provide clear instruction on collaboration, where real opportunities exist to leverage tools and technologies to exchange information with industry and improve knowledge transfer. The ability to leverage Acquisition 2.0 methods, as piloted in the Better Buy Project, demonstrates the potential of these initiatives that can and should be rolled out government-wide in an effort to standardize and improve how the government buys. These collaboration tools can help execute on the OMB guidance, which is to better understand the market, improve requirements development, and create opportunities for increased competition. This will ultimately set the stage for creating a performance-based acquisition construct and allow for a focused approach on oversight and accountability. Acquisition leaders who view these tools and techniques as unrealistic or time-wasters are not only missing out on real opportunities, but also possibly preventing the transformation of the acquisition process into a world-class, 21^st century buying organization that these tools could help realize.

Only through the improved caliber of the supplier base can increased competition and quality be achieved, and it is the responsibility of government leaders to not only provide guidance, but the tools and techniques agencies need to accomplish the President's goals for improving acquisition outcomes.

Acquisition Reform Should Include Protest Actions

Recent reporting by Federal Computer Week (FCW) highlights an issue that is not being addressed by acquisition reform initiatives; reforming the contract protest process.

Writing in the Editor’s Notebook blog at Washington Technology, Nick Wakeman discusses the protest by Unisys and General Dynamics of TSA’s contract award to Computer Sciences Corp for the agencies information technology infrastructure.

According to FCW:

…the number of protests filed with the Government Accountability Office jumped 17 percent between fiscal 2007 and 2008, according to a December 2008 report. Part of that can be attributed to an increase in GAO’s jurisdiction. But even if you take that out, Wakeman notes, that still leaves a jump of 10.9 percent, which followed an increase of 6 percent the year before. In contrast, the number of protests had declined 2 and 9 percent in the preceding years…

I see three fundamental issues at play here that need to be addressed regarding this rise in protests:

1) Business Strategy

With such large awards like the TSA contract seemingly the norm for information technology, many companies cannot afford to not have the business. These contract wins are often built into the bottom line profit projections, so protests are a vehicle to open competition, or even go on fishing expeditions in hopes of finding errors in process that can sustain a protest. Further, there is now an understanding in the market that protests are almost a given for these large acquisitions, therefore companies competing for opportunities are creating internal process teams as part of proposal centers to execute protest actions as part of capture management.

Also reported by FCW earlier this year was a piece by Robert J. Guerra, a partner at consulting firm Guerra and Kiviat, who was horrified to receive an e-mail advertising a seminar titled “A Successful Bid Protest Can Produce a Contract Win.”

…“It is appalling that in a time when government acquisition personnel are under increased stress to conduct ever more complex acquisitions, we as a community should seek ways to protest more contract awards,” Guerra wrote in a Federal Computer Week column. “It isn’t bad enough that we already have protests that in many cases are ‘fishing expeditions.’ Now we want sales reps and managers pursuing protests as a way to make their quotas.”…

I also wrote about this phenomenon in a piece for Defense AT&L magazine, as the increase in protests is a sign that more companies are competing against one another for smaller shares of a shrinking market for multibillion-dollar projects. As a result of poor source-selection practices and award decisions, the government has opened the door for the opportunities to protest. Industry is simply taking advantage.

2) Acquisition Workforce

I do not think anyone is under any illusions that workforce issues are a common denominator for many acquisition problems, and protests are no different. There has been a significant decline in solicitation quality, with the subsequent rise in the number of mistakes or lack of adherence to policy and regulations being committed by personnel conducting source selections. Further, these issues have been exacerbated by poor leadership that allows this to happen.

This goes back to a constant theme of mine that the skills of the acquisition workforce need to be restructured to encompass the life cycle of contract management, to include requirements development, contracting, and program management. Business advisors, and well-trained ones at that, are what the workforce should be, combined with having the technology and tools to increase productivity and quality. Mistakes often happen because source selections are often conducted by disinterested parties with little to no background in contracting, the requirement, or training on process. Again it is not a focus on numbers, although obviously a larger workforce is needed, but also the quality and caliber of new hires that bring business management skills to the table. Knowledge transfer is also vital from the experienced contract managers for success on this front, to help reduce mistakes and errors that are easily corrected, and shut the door to protest opportunities.

3) Accountability

It seems that there was a time when companies that protested contract after contract received a reputation for being troublemakers, or unethical. Further, these companies were often shunned by industry as well for poor management and toxic reputation. Those days are now gone.

The fact of the matter is that there are little to no consequences for companies to protest, whether it is for one contract or many. This needs to change. Although I am not advocating for industry to lose the right to protest, there does need to be a balance of accountability to the taxpayers. The way the system is structured now, firms can protest at will without having to reimburse the Government if they lose, or reimburse the Government for damages, lost time, and expenses for defending the protest. Further, firms that often protest are no longer treated with any animosity, as it is just business as usual. Under these circumstances, what does a company have to lose? Very little. In fact, the current system encourages companies to protest since there are no consequences for being wrong, or filing what can be viewed as a “frivolous lawsuit.”

There needs to be punitive consequences for firms that protest. Certainly if protests get upheld, that is one thing. But firms that habitually protest and lose must be held accountable for the lost time and costs of defending the protest to the program. Further, firms that lose a certain number of protests in a given period should also be held accountable, such as being barred from competition for a set period of time.

I disagree with a statement submitted to Congress by GAO General Counsel Gary Kepplinger:

…Well-meaning attempts to ward off such protests “may have, on balance, the unintended consequence of harming the federal procurement system by discouraging participation in federal contracting and, in turn, limiting competition.”…

I believe these measures would actually help improve the quality of vendors who compete, as companies that waste taxpayer money will think twice before filing protests without actual justification. Only when firms are held accountable for their actions will we see real change. This is contract management and acquisition reform 101.

Although protests are not going away anytime soon, I feel that the current system needs to be relooked, as we cannot afford a process that allows industry to protest with impunity, bully and intimidate contracting officials, and waste taxpayer funds. A balance is needed, and badly overdue.